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Friday, November 25, 2011

Republicans Should Call the President's Bluff

Recently, the president has reprised his half-hearted call for Congress to extend the payroll tax cut enacted as part of the fiscal compromise passed last December. You may recall that the president had billed this temporary reduction in the FICA tax (to 4.2% from 6.2%) as a "payroll tax holiday" from the moment he signed it into law. There is no record of anyone who authored/sponsored the legislation in Congress intended this to be a permanent tax cut. This makes the president's call for Congress to extend the lower rate, lest they allow a tax increase to happen, disingenuous at best.

Congressional Republicans should not take the bait and engage President Obama in a serious debate, something the president has demonstrated no interest in having. Rather, they ought to pass a bill extending the payroll tax holiday for one year and also reducing spending by some significant amount (I'm talking hundreds of billions of dollars below the baseline.) during the same time period. That way, if the Democrat-controlled Senate balks and votes down the package, the GOP can legitimately blame the Democrats for the eventual reversion of the FICA tax rate to its pre-2011 level come January. If the Dems try to play games and pass legislation extending the current rate but with no spending cuts, then the House should simply take that bill, add a bunch of spending cuts to it, pass the amended bill, and then it would go to a Conference committee, by which time Congress will have already adjourned for its Christmas/New Year's recess. Obama will once again come off as a weak and feckless leader, something Republican candidates hoping to take him on next year should be sure to capitalize on just in time for primary season.

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